The oil and gas market is entering a new phase as claims “well exceed” premiums, an expert has said.
Ryan Mansom, national practice leader, oil and gas, for
Gallagher in Australia and New Zealand, said that a tougher market is impacting the role of the broker.
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“The market itself is getting tougher,” Mansom told Insurance Business. “There is a real change in the market and it is going to need brokers to be more tactical, more strategic in our approach to insurers.”
Rather than shy away from the changing market, Mansom stressed that he is relishing the opportunity to work in a tougher environment.
“I’ve said this to anyone who will listen: I am looking forward to this phase coming,” Mansom continued. “The reason being that it is actually going to start weeding out those who suggest that they know what they are doing from those who actually do know what they are doing.”
Mansom said that clients within the oil and gas industry have faced a growing number of claims over recent years as natural catastrophes have hit the industry. A recent Gallagher report found that GWP within the oil and gas industry stands at an approximate US$1-2 billion while the value of expected claims is approaching an estimated US$3-4 billion, highlighting the problems the market faces.
For brokers, Mansom said that the days of expecting price reductions from insurers are gone as many in both the corporate and domestic market have been exposed to losses and some are establishing a 10% price rise as their new starting point.
However, these pricing changes have, in turn, brought the role of the broker into clearer focus for clients.
“The reliance on the broker will become a lot greater both in placement and in claims as well,” Mansom continued. “Everyone likes to think that they are never going to have a claim but if that was the case, you would never buy insurance, so when claims come about you want to make sure you have the right people on board.”
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